Loan Modifications in Bankruptcy

Ask for a loan modification through the Federal Court

The Illinois Northern District Court has started a mediation program for a loan modifications.  You must apply or ask your attorney to request the modification through the court.

The Program supplies an electronic portal that assists communication between debtors and lenders.  Details of the Program and sample forms are available here.

The program is entirely voluntary: both debtor and lender must consent to participate. Debtors and lenders are also free to modify mortgage obligations without using the Program and the portal. The Program simply provides a new vehicle for doing so.

This is an exciting program because if you've had difficulty securing a loan modification, this court ordered process allows you the opportunity to reach decision makers through the court.  If there's any possibility of a loan modification, this would your opportunity to be reviewed and considered for a modification.

 

I have seen that lenders are often a bit more flexible in considering loan modification now that they are facing a Debtor in bankruptcy.

 

For Illinois area borrowers that are facing foreclosure, if you had difficulty securing a loan modification, this mechanism provided by the court may be a great way to secure consideration of your modification request.  The joint effort of a Chapter 13 Bankruptcy and a court mediated application for a modification are powerful mechanisms to save your home from foreclosure.        

The court rules on the procedure to ask for consideration of loan modification through the bankruptcy court are here